A 235 sq ft studio flat at Novo Land in Tuen Mun, was leased at HK$12,200 (US$1,565), which translates to HK$51.9 per square foot, setting a new high for rents in the estate.
The rent is on par with some projects on Hong Kong Island. For example, a 236 studio sq ft flat at The Holborn in Sai Wan Ho, is currently leasing for HK$14,000 per month, or HK$59 per square foot, according to data available on Midland Realty website.
On a per square foot basis, the rental yield is higher than units at Residence Bel-Air, a luxury housing estate in the Southern district of Hong Kong Island. A 1,340 sq ft seaview unit in phase six of Bel-Air was leased for HK$65,000 per month, or HK$48.5 per square foot, according to a Midland agent.
“The rental market in that area [New Territories] is relatively more active,” said Buggle Lau Ka-fai, chief analyst at Midland Realty. Small to medium-sized flats priced around HK$20,000 per month are very popular and New Territories tends to offer more options than Hong Kong Island, he added.
The Hong Kong Monetary Authority last kept its base rate unchanged for the seventh time earlier this month, a move in lockstep with the US Federal Reserve decision. The Fed has signalled one potential rate cut this year as early as September, while investors have priced in three cuts for the rest of this year, according to CME Group.
Prices of second-hand homes fell 1.2 per cent in June to the lowest since October 2016, according to government data, bringing the total decline this year to 3.1 per cent.
As there are more universities in Kowloon and New Territories, a surge in demand from students for rental accommodation has become a critical support for prices in these areas, Lau said, as indicated by the latest data for July. Apart from overseas students, some 140,000 people have arrived in the city since the government launched the Top Talent Pass Scheme in late 2022, sources said.
Rents in New Territories West have performed the best in Hong Kong this year, scoring a 6.7 per cent cumulative gain in the first seven months, according to Centaline’s Centa-City Rental Index, while New Territories East posted a 5.1 per cent gain. Both are within 3 per cent from their record-highs set in 2018 and 2019, respectively.
The gains surpassed the average increase in Hong Kong, according to Centaline’s index, which tracks rents in 138 housing estates. The broader market rose 4.8 per cent this year up to July. Rents in Kowloon advanced by 4.8 per cent, while Hong Kong Island recorded a 4.3 per cent increase, it added.
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How Hong Kong’s housing market became among the world’s most unaffordable
How Hong Kong’s housing market became among the world’s most unaffordable
“The overall rental market is thriving,” said Lucia Leung, director of research and consultancy for Greater China at Knight Frank in Hong Kong. “When quality listings come up in estates with tight supply, the rents can be higher.”
Given the shortfall in the supply of rental properties during the summer holiday, new listings are typically taken up quickly, she said. Locations along the East Railway MTR line in New Territories are especially popular, she added.
Demand from newcomers to the city is pushing up rents as they evaluate the cost of buying their own place, said Norry Lee, senior director of projects strategy and consultancy department at JLL in Hong Kong. That is especially true amid growing expectations that interest rates will decline later this year.
“There is a strong wait-and-see atmosphere in the market, with some prospective buyers switching to renting,” Knight Frank’s Leung said. “Due to the shortage of rental properties, rents have reached multi-year highs” in some hotspots, she added.